Wall Street gains/ Big Tech earnings/ oil prices drop/ U.S. stock market/ Treasury yields/ Newslooks/ NEW YORK/ J. Mansour/ Morning Edition/ U.S. stocks climbed Monday morning, with Big Tech driving gains ahead of major earnings reports this week. The S&P 500 rose 0.5%, while the Dow Jones and Nasdaq also saw gains. Meanwhile, oil prices tumbled nearly 6%, the largest drop in over two years, easing concerns of supply issues from Middle East tensions.
Stock Market Kicks Off Big Tech Earnings Week: Quick Look
- Market Movement: S&P 500 and Nasdaq rise, driven by Big Tech optimism.
- Oil Prices: U.S. crude and Brent crude dropped nearly 6% amid stable Middle East tensions.
- Treasury Yields: Holding steady at 4.24%, reflecting resilient economic data.
- Election Impact: Financial markets remain volatile as the U.S. presidential election nears.
- Global Stocks: Mixed performance, with Japan’s Nikkei up 1.8%.
Wall Street Gains as Big Tech Earnings Loom, Oil Prices Drop
Deep Look
Wall Street opened the week on a positive note as investors geared up for a significant earnings season for Big Tech while keeping an eye on plummeting oil prices. As of Monday morning, the S&P 500 rose by 0.5%, reversing some losses from the previous week. The Dow Jones Industrial Average climbed by 285 points, or 0.7%, and the Nasdaq composite, close to its July peak, saw a 0.6% boost.
The spotlight this week is on Big Tech, with five of the “Magnificent Seven” tech giants—Alphabet, Meta, Microsoft, Apple, and Amazon—set to report earnings. These companies have historically had a strong influence on the S&P 500, and investors are eager to see if recent gains in their stock prices align with substantial revenue growth. Earlier concerns that these stocks were overvalued have tempered, but high expectations remain for each to post solid earnings results that justify recent recoveries.
Tesla, another “Magnificent Seven” member, posted better-than-expected earnings last week, leading to one of its strongest days in recent history and adding to the sector’s momentum. Monday’s rally in Big Tech also helped offset declines in the oil and gas sector, where stocks like Exxon Mobil and ConocoPhillips fell by over 1% as oil prices slid.
U.S. crude oil dropped by 5.9% per barrel, marking its worst decline in more than two years. International benchmark Brent crude mirrored this drop, also falling by 5.9%. This marked the first trading session following Israel’s restrained response to Iranian military targets, easing some of the geopolitical concerns that had previously sent oil prices higher. Investors had feared a more extensive escalation could disrupt global oil supply, particularly from major producer Iran, pushing Brent crude to nearly $81 per barrel earlier this month. However, recent developments have brought it back down closer to $71.
In addition to earnings and oil prices, investors are also navigating the typical market volatility that comes with a U.S. presidential election season, particularly as Election Day approaches in just over a week. Historically, markets experience increased volatility heading into an election but tend to stabilize once results are in, regardless of the winning party.
Bond markets also remain active, with Treasury yields holding steady after recent sharp rises. The yield on the 10-year Treasury note held at 4.24%, consistent with late Friday’s close. This figure is significantly higher than early October’s 3.60%, reflecting recent data that shows an unexpectedly strong U.S. economy. This economic resilience supports Wall Street’s hopes for a gradual inflation cooldown without a deep recession. However, sustained economic strength has led traders to scale back expectations for significant rate cuts by the Federal Reserve, as the central bank balances economic growth with inflation control. With lower expectations for aggressive rate cuts, Treasury yields have reversed some of their recent declines.
In international markets, Japan’s Nikkei 225 rose by 1.8%, rebounding from a key parliamentary election in which Prime Minister Shigeru Ishiba’s coalition lost its lower house majority. Asian and European stock indexes showed mixed performance, with many international investors also keeping a close eye on the U.S. earnings season and its potential global impact.
Overall, as the week progresses, Wall Street will likely continue to react strongly to Big Tech’s earnings, with analysts predicting that any significant deviation from expected results could impact broader market sentiment. Coupled with the recent stabilization in oil prices and steady Treasury yields, the market’s response to this week’s developments could set the tone for the final stretch of the year.
